Strategies to Drive Growth in 2017
With a foundation in finance and the emerging adoption of data science as a discipline, modern CFOs are uniquely positioned to make strategic organizational decisions. CFOs are increasingly viewed as strategic business leaders who are responsible for contributing to enterprise-wide growth. To successfully meet this objective, there are three areas CFOs should consider prioritizing in 2017: integrating finance and marketing, embracing an overall “business orientation,” and generating insights from cross-functional data. By incorporating these three areas into strategic plans, modern CFOs will be better equipped to make strategic organizational decisions that drive top-line results.
1. Align Finance and Marketing to Ensure a Positive ROI
Up to 78% of executives say marketing and finance alignment is crucial for organizational growth; however, only a few companies show signs of alignment. According to a 2016 Forrester Study, finance and marketing “have similar goals of increasing revenue but often have different perspectives and KPIs," which might explain their lack of relationship. Further research from Forrester shows that the marriage of finance and marketing improves overall business success. At first glance, the business objectives of marketing and finance look divergent—even oppositional; the goal of marketing is to increase customer acquisition and improve brand awareness while finance focuses on keeping budgets on pace and profits at peak. However, according to Forrester, “improved collaboration between marketing and finance… [improves] overall business results.”
In a recent interview with Jeff Winsper, CEO of Black Ink ROI, Winsper reveals that the real challenge CFOs have is knowing who their customers are and what they’re buying. Winsper highlights that not knowing a customer’s purchasing behavior and characteristics could hinder a company’s growth. This is why the alignment between finance and marketing is crucial. Marketing can make a CFO’s customer knowledge more fruitful and robust, allowing the CFO to forecast and budget with agility and uncover new growth opportunities. To elaborate, if you’re a CFO trying to develop forecasts or discovering what geolocations are more profitable for your product, integrating customer data into your analysis can help you make more precise, profitable, and agile decisions.
2. Embrace the 'Business-Oriented CFO' to Drive Enterprise Wide Growth
Financial reporting, forecasting, maintaining shareholder relations, and managing cash flow, although important, are no longer the sole building blocks of a CFO’s success. There is a new CFO breed that Jeff Winsper calls the “business-oriented CFO.” The new business-oriented CFO embraces the power of analytics to identify new opportunities and relationships. This CFO goes beyond conventional metrics like margin, operating cash flow and revenue, and dives deeper into data and information to drive more strategic business decisions. According to Accenture, the traditional finance role is being reconstructed. Accenture states that the new CFO role “deals [with] analytics and forward-looking decisions to create value and manage risk. It shifts traditional accounting and processing to cross-functional integrated business services models.”
Jim Johnson, CFO at Adaptive Insights, expands on the CFO reconfiguration. He emphasizes that companies are now increasingly relying on CFOs to define metrics and measurements that pertain to “who [their] customers are, what they are doing with [the company’s] products, and how profitable a line of business or geography is.” CFOs are evolving from traditional number crunchers into strategic growth engineers.
3. Enable a Cross-Functional Data Flow
Companies don’t grow in silos. Cross-functional data is integral for optimal top-line growth, as well as bottom-line profitability. CFOs are increasingly integrating data science and statistical analysis into their toolbox to enhance the company’s strategic business value, budget more accurately, increase the efficiency of their assets, and predict potential business disruption. According to Dun & Bradstreet’s recent 2016 Enterprise Analytics Study, only 38% of companies share analytical insights across departments. Furthermore, Winsper illustrates the importance of cross-functionality specifically, within the manufacturing sector that sells through independent dealer/retailers. He states that, “in a perfect world, you would want data to flow from POS systems right into the desktop of the CFO.” This type of cross-functional data would enable the CFO to reallocate resources to areas of high-growth. This data would then help the CFO make strategic business decisions involving assets such as labor and working capital.
With multichannel data, data-inspired CFOs can co-create consistent profitable growth. According to Shaheen Dil, at Protiviti, the information most sought-after by CFOs is foresight; “[Analytics] allow CFOs to see the future…from what is known today.” A recent blog from CFO.com highlights that cross-functional data can help CFOs “get a holistic view of customers, competitors, suppliers, partners, and employees…helping manage business performance at granular levels.” With a cross-functional foundation and analytics toolbox, CFOs can improve their organization’s position in the industry, better manage assets, budget more effectively, and predict potential organizational disruption.
By bridging finance and marketing’s communication gaps, adopting a business-oriented mindset and embedding cross-functional analytics into their workflows, CFOs are uniquely positioned to stimulate and sustain enterprise growth. With the combination of their financial agility and statistical aptitude, CFOs are no longer traditional number crunchers, but modern data-savvy engineers of growth.